Canada’s employment grew 51k in November, above expectation of 25k. Employment gains were concentrated in full-time work (+54k).
Employment rate was unchanged at 60.6%. Unemployment rate jumped from 6.5% to 6.8%, as more people are looking for work. Labor force participation rate rose 0.3% to 65.1%.
Total hours worked was down slightly by -0.2% mom but up 1.9% yoy. Average hourly wages grew 4.1% yoy, slowed from 4.9% yoy in October.
US non-farm payroll employment grew 227k in November, close to expectation of 218k. That’s notably higher than the average of 186k monthly growth over the prior 12 months.
Unemployment rate rose from 4.1% to 4.2%, above expectation of 4.1%. Labor force participation rate was at 62.5%, ticked down from 62.6%.
Average hourly earnings rose 0.4% mom, above expectation of 0.3% mom. Over then past 12 months, average hourly earnings rose 4.0% yoy.
BoE MPC member Swati Dhingra, often viewed as the most dovish voice within the committee, reinforced her call for policy easing during an interview with Bloomberg TV today.
Dhingra highlighted the “very restrictive stance” of current monetary policy, arguing that high interest rates are dampening consumption, investment, and supply capacity. She stressed, “We should be easing policy more” to alleviate the strain on living standards and pave the way for economic normalization.
Dhingra pointed to easing wage pressures and declining service inflation as key indicators supporting a shift towards lower rates.
She advocated for a “gradual” approach to rate cuts, suggesting the Bank Rate should eventually settle between 2.5% and 3.5%, her updated estimate of the “neutral rate.” Notably, she acknowledged that this estimate has risen since BoE’s 2018 estimate of 2%-3%.
Turning to the potential fallout from a global trade war, Dhingra noted its indirect effects could significantly harm productivity and business adaptability. While she believes the direct impact on UK growth and inflation might be “limited,” she cautioned that secondary effects, such as supply chain disruptions and reallocation challenges, would be far more damaging.
The pivotal US non-farm payroll report today stands at the center of market focus, with its implications likely to influence both the Fed decision outlook, but probably more on January meeting than this month’s.
Fed fund futures indicate a 70% probability of a 25bps rate cut this month, up from 66% a week ago. This reflects a growing expectation that recent economic data, including ISM services and manufacturing figures, ADP employment, and JOLTs openings, support further easing to 4.25%-4.50% at the December 18 meeting. This mounting confidence in Fed’s decision is unlikely to be deterred by today’s data, barring any drastic upside surprises.
However, sentiment regarding January paints a different picture, with just a 20% likelihood of another 25bps cut to 4.00%-4.25%. A stronger-than-expected NFP report today, particularly one highlighting a significant rebound in job growth after October’s hurricane- and strike-induced distortions, could solidify expectations of a pause in January.
Recent labor market indicators offer a mixed but steady backdrop. ISM Manufacturing Employment improved to 48.1 from 44.4, while ISM Services Employment softened to 52.1 from 56.0. ADP employment showed a moderation in net job additions at 146K, down from a revised 184K prior. Meanwhile, the 4-week average of initial unemployment claims fell to a strong 218K from 236K. These data points suggest no major red flags for today’s NFP release.
In terms of market reactions, Dollar Index remains in a corrective phase after peaking at 108.07. While a recovery today is possible, near-term risks tilt to the downside as long as 106.72 resistance holds. Deeper pullback could extend to 38.2% retracement of 100.15 to 108.07 at 105.04 completion. Nevertheless, rise from 100.15 would remain in favor to resume at a later stage as long as 55 D EMA (now at 104.77) holds.
Japan’s labor market data for October showed nominal wages, or labor cash earnings, rose 2.6% yoy, in line with expectations. Regular pay, or base salary, grew 2.7% yoy, marking the fastest increase since November 1992. Full-time workers saw an even sharper wage rise at 2.8% yoy, the highest increase since comparable records began in 1994. Overtime pay also rebounded, registering a 1.4% yoy growth compared to a -0.9% decrease in the prior month.
However, real wages—adjusted for inflation—was stagnant, showing no change from a year ago. This followed declines of -0.4% and -0.8% yoy in September and August, respectively. The inflation rate used by Japan’s labor ministry for these calculations, excluding owners’ equivalent rent, slowed to 2.6%, the lowest in nine months.
On the household front, spending fell -1.3% yoy, better than the forecasted -2.6% yoy decline but still reflecting cautious consumer behavior. Food expenditures, comprising around 30% of total spending, dropped -0.8% yoy. Other categories faced sharper declines, including a -13.7% yoy plunge in clothing and shoes, a -10.7% yoy drop in housing-related expenditures, and a -14.0% yoy decrease in education spending, such as tuition fees.
Canada’s merchandise trade deficit with the world narrowed to CAD -0.9B in October from September’s CAD -1.3B, driven by a 1.1% mom rise in exports. This marks a rebound following three consecutive monthly declines. Imports also increased, albeit at a slower pace, rising 0.5% mom.
Despite the headline growth in exports, declines were recorded in 8 of the 11 product sections. The increase was partly attributed to higher prices, with export volumes rising modestly by 0.4% mom in real terms.
US initial jobless claims rose 9k to 224k in the week ending November 30, above expectation of 215k. Four-week moving average of initial claims rose 750 to 218k.
Continuing claims fell -25k to 1871k in the week ending November 23. Four-week moving average of continuing claims fell -3k to 1884k.
Eurozone retail sales volume declined by -0.5% mom in October, underperforming expectations of a -0.4% mom contraction. Breaking down the data, sales for food, drinks, and tobacco edged up 0.1% mom, while non-food products (excluding automotive fuel) slumped -0.9% mom, and automotive fuel sales in specialized stores dropped -0.3% mom.
Across the broader European Union, retail sales volume fell by -0.3% mom. Among member states, the sharpest monthly declines were seen in Belgium (-1.7%), Germany (-1.4%), and Denmark and Cyprus (both -1.1%). Conversely, Luxembourg led with a strong 2.4% increase, followed by Poland at 2.2% and Lithuania at 1.5%.
Bitcoin has surged past the highly anticipated 100k milestone, riding on a wave of optimism fueled by a couple of bullish factors. In particular, with anticipation of favorable regulatory environment in the US ahead, Bitcoin could now be heading to next target at 120k.
A key driver behind Bitcoin’s leap was President-elect Donald Trump’s nomination of Paul Atkins as the next chair of the Securities and Exchange Commission. Known for his pro-crypto stance, Atkins has a track record of advocating for innovation within the financial sector and criticizing the SEC’s historically tough stance on digital asset firms. His nomination is widely seen as a signal of a more accommodative regulatory approach to cryptocurrencies.
Adding to the bullish momentum, Fed Chair Jerome Powell likened Bitcoin to gold, calling it “just like gold only it’s virtual.” He emphasized that Bitcoin is neither a primary form of payment nor a direct competitor to Dollar but rather serves as a speculative alternative to gold. While acknowledging Bitcoin’s volatility, Powell’s remarks underscored its growing legitimacy as a store of value.
The cryptocurrency’s rally also coincides with broader market strength, as NASDAQ hit fresh record highs. This parallel momentum between Bitcoin and equities highlights the increasing overlap in sentiment toward risk assets, driven by a mix of optimism around economic resilience.
Technically, near term outlook in Bitcoin will stay bullish as long as 93559 support holds. 100% projection of 24896 to 73812 from 52703 at 101619 taken out, the next target is 138.2% projection at 12304, which is slightly above 120k psychological level.
BoJ board member Toyoaki Nakamura expressed a cautious stance on monetary policy adjustments, emphasizing the need for careful calibration aligned with Japan’s economic recovery.
“We are at a state where it’s important to adjust the degree of monetary easing carefully in accordance with the economic recovery by assessing a broad array of data,” Nakamura said.
As a known dove on the BoJ board, Nakamura raised doubts about the durability of current wage hikes, saying he is “not confident” about their sustainability. He also flagged concerns about inflation, noting the possibility that the annual rate “may not reach 2% from fiscal 2025 onwards.”
In a related development, a Jiji Press report indicated growing hesitation within BoJ regarding a premature rate increase. Market expectations for a December rate hike have fallen sharply, with traders now pricing in only a 36% chance, down from 66% at the end of last week.
San Francisco Fed President Mary Daly emphasized a measured approach to interest rate adjustments during a PBS News Hour interview.
She noted there’s “no sense of urgency” to lower rates quickly but highlighted the need to “carefully calibrate our policy” to align with current and expected economic conditions.
Daly added that policymakers will deliberate on the best path forward at the upcoming December 17–18 FOMC meeting.
Despite signs of economic resilience, she stressed that “there’s a lot more work for us to do” to achieve the 2% inflation target while supporting durable economic growth. Inflation remains the top challenge for many Americans.
Fed Chair Jerome Powell expressed optimism about the US economy during an event overnight, stating it is in “very good shape” with “no reason for that not to continue.” He highlighted reduced downside risks in the labor market, stronger-than-expected growth, and inflation running slightly higher than previously anticipated.
Given these developments, Powell suggested the Fed could “afford to be a little more cautious” in its approach to cutting interest rates as it works toward a neutral policy stance.
Reflecting on Fed’s 50bos cut in September, Powell noted it was intended as “a strong signal” of support for a potentially weakening labor market. However, subsequent data revisions revealed that the economy was “even stronger than we thought”.
Speaking at an event today, St. Louis Fed President Alberto Musalem emphasized the importance of maintaining “policy optionality” as the central bank assesses the evolving economic environment.
He noted that the “time may be approaching to consider slowing the pace of interest rate reductions, or pausing” altogether to evaluate incoming data and the economic outlook more carefully.
BUT, Musalem refrained from committing to a specific timeline, saying, “It might be December, it might be January. Could be later.”
He highlighted the significance of upcoming economic reports, including inflation, retail sales, and the crucial November jobs data due on Friday, in shaping his stance ahead of the Fed’s next policy decision.
“I’m going to wait until I see that data, until I can be assured in which way I’m leaning,” he stated.
US ISM Services PMI slipped significantly to 52.1 in November, down from October’s robust 56.0 and missing market expectations of 55.5. This marks a sharp deceleration in the service sector, which has been a key driver of economic resilience.
Key components of the report painted a picture of slower activity across the board. Business activity/production fell from 57.2 to 53.7, while new orders mirrored this decline, dropping to 53.7 from 57.4. Employment growth also softened, with the employment index easing from 53.0 to 51.5, indicating reduced hiring momentum. Prices index ticked up slightly, rising to 58.2 from 58.1, suggesting persistent cost pressures within the sector.
According to ISM, the current PMI reading corresponds to an estimated 1% annualized increase in real GDP. This suggests that while the services sector remains in expansion territory, its contribution to broader economic growth has slowed markedly.
Speaking at the European Parliament’s Committee on Economic and Monetary Affairs, ECB President Christine Lagarde flagged “weaker” short-term growth prospects for the Eurozone, citing slowdown in services and persistent contraction in manufacturing. Despite this, she projected a gradual recovery in consumer spending and investment as monetary tightening effects fade and real incomes improve.
Lagarde cautioned, however, that the medium-term economic outlook remains fraught with uncertainties, particularly due to elevated “geopolitical risks” and potential “trade barriers.” She emphasized that Eurozone’s deep integration into global supply chains leaves it “vulnerable to foreign shocks,” posing challenges to manufacturing and investment.
On inflation, Lagarde noted an expected temporary rise in Q4 as earlier declines in energy prices fade from annual comparisons. Beyond that, inflation is anticipated to decline toward ECB’s target next year.
Reiterating ECB’s data-driven approach, Lagarde stated, “We will review our stance again next week, following our data-dependent and meeting-by-meeting approach. We are therefore not pre-committing to a particular rate path.”
US ADP report showed private employment increasing by 146k in November, missing market expectations of 165k. The growth was concentrated in service-providing sectors, which added 140k jobs, while goods-producing sectors saw a modest rise of 6k.
By establishment size, large companies led the way with 120k new jobs, while medium-sized firms added 42k. Small businesses, however, reported a loss of -17k jobs.
Pay gains saw an uptick for the first time in over two years. Job-stayers’ pay growth edged up to 4.8% yoy, while job-changers experienced a more robust 7.2% yoy increase.
ADP’s Chief Economist, Nela Richardson, highlighted the mixed industry performance, stating, “Manufacturing was the weakest we’ve seen since spring. Financial services and leisure and hospitality were also soft.” The data underscores a healthy but uneven labor market, with certain sectors and business sizes faring better than others.
In an interview with the Financial Times, BoE Governor Andrew Bailey acknowledged that while inflation had recently dropped to target levels, there remains “a distance to travel” in managing price stability. He noted that inflation might temporarily exceed target levels again ahead.
Bailey addressed market expectations for four rate cuts next year, emphasizing that BoE’s projections are “conditioned on market rates” and highlighting the word “gradual” in their approach.
On the impact of Donald Trump’s return to the White House and the associated rise in tariffs, Bailey described the effects as “not straightforward at all.”
He explained that such policies could move traded prices but are also contingent on reactions from other countries and exchange rate adjustments, adding further uncertainty to the inflation outlook.
Eurozone PPI increased by 0.4% mom in October, aligning with market expectations. On an annual basis, PPI fell by -3.2% yoy, the anticipated -3.3% decline, reflecting mixed dynamics across sectors.
In Eurozone, Energy prices surged by 1.4% mom, driving the monthly increase, while intermediate goods prices slipped by -0.1% mom. Capital goods prices were unchanged, while durable consumer goods rose by 0.3% mom and non-durable consumer goods by 0.2% mom.
Across the EU, PPI also rose by 0.4% mom, while the annual figure showed a decline of -3.0% yoy. Among Member States, Estonia and Italy led the monthly increases with a 1.0% rise, followed by France (+0.9%) and Sweden (+0.8%). Conversely, Bulgaria experienced the sharpest decline at -2.9%, followed by Slovakia (-2.0%) and Romania (-1.5%).
UK services sector showed signs of slowing in November, with final PMI Services reading dropping to 50.8 from October’s 52.0, marking the weakest level in 13 months. Composite PMI similarly declined to 50.5 from 51.8, barely holding above the threshold for expansion.
Tim Moore, Economics Director at S&P Global Market Intelligence, remarked that service providers saw activity “close to stalling”. Businesses faced weaker sales pipelines, postponed projects, and heightened caution among clients, all of which curtailed growth.
Additionally, the anticipation of higher employer National Insurance contributions weighed on hiring decisions, with workforce numbers shrinking for the second consecutive month. Many firms cited margin pressures as a reason for not replacing departing staff.
Inflationary pressures intensified, with salary costs driving input price increases at the fastest pace since April. This, coupled with worries about policies outlined in the Autumn Budget, led to a “considerable reduction” in business optimism.
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China’s CPI falls to 0.2% yoy in Nov, PPI down -2.5% yoy, deflation pressures persist
China’s CPI decelerated from 0.3% yoy to 0.2% yoy in November, below market expectations of 0.5% yoy, and marking its lowest level in five months. Persistent deflationary pressures highlight the urgency for stronger fiscal measures to reinvigorate the economy.
Food prices was the primary driver of inflation, surging by 1% yoy, with notable increases in vegetable and pork prices at 10% yoy and 13.7% yoy, respectively. However, core inflation, which excludes volatile food and energy prices, edged up only marginally to 0.3% yoy from 0.2% yoy.
Meanwhile, PPI improved, registering a -2.5% yoy decline in November compared to -2.9% in October, beating expectations of -2.9% yoy. While this marked the 26th consecutive month of negative readings, the moderation was attributed to a combination of existing and incremental policy measures alongside a recovery in domestic demand for industrial goods.